The big GST overhaul that Prime Minister Narendra Modi announced during his Independence Day speech will most likely be enough to boost stock markets in this week.
With consumers expecting prices of everyday essentials to come down by Diwali – when the reforms get implemented – the potential for improvement in issues related to compliance, evasions, and litigation has impacted investors’ sentiment.
Besides, trends in global markets and the trading activity of foreign investors also indicate an optimistic outlook.
"The week ahead is likely to start on a cheerful note, as markets draw optimism from Prime Minister Narendra Modi's Independence Day address. His statement on a potential GST rate reduction ahead of Diwali has the potential to significantly boost sentiment and lift equities out of the bear grip," said Santosh Meena, Head of Research at Swastika Investmart.
Also Read: PM urges states to cooperate in implementing GST reforms proposal
Meanwhile, India welcomed the summit in Alaska between US President, Donald Trump, and Russian President, Vladimir Putin, even though there was no peace deal cracked. While Trump acknowledged that “some great progress” had been made, there were no more details offered.
While Ukrainian President, Volodymyr Zelensky, is expected to meet with Putin and Trump along with leaders from Europe to engage in ceasefire talks, Indian investors celebrate the upgrading of India’s sovereign credit rating from 'BBB-' to 'BBB' by global rating agency, S&P.
The upgrade came after 18 years last week and is another reason to instill optimism in the domestic equity market in the week ahead, analysts said.
"Going forward, the FII activity will be influenced by the action on the tariff front. Latest news of easing of tensions between the US and Russia and no further sanctions on Russia indicate that the secondary tariff of 25 per cent imposed on India is unlikely to come into effect after August 27th. This is a positive factor. Another positive factor, which can influence FII behaviour, is the rating agency S&P raising India's credit rating from BBB- to BBB," opined VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.
On the global front, the US Fed meeting minutes and upcoming US macroeconomic data will be crucial for market direction, Meena added.
Saurabh Agarwal, Tax Partner, EY India, has hailed Prime Minister Modi’s GST 2.0 vision. “It is a timely and strategic move to build a resilient Indian economy. These are not merely procedural changes; they are essential structural reforms designed to mitigate the risks arising from global trade tensions. By addressing the inverted duty structure, we are unlocking crucial working capital and making our exports more competitive on the global stage," he said.
Last week, the Sensex climbed 739.87 points or 0.92 per cent, and the Nifty edged higher by 268 points or 1.10 per cent.
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